Balancing the books - aka 'The government is not for turning'

By Hamish Champ

Posted 28 January 2013

On the back of the Office for National Statistics' (ONS) first stab at assessing the UK's economic performance in the last quarter – down 0.3% – rumblings have begun to grow about the need for a Plan B to get the country back on its feet.

Mayor of London Boris Johnson – perhaps with national political ambitions in mind – lost little time in arguing that the 'hair shirt' approach was not the way to get the UK going again.

Yet calls from Johnson and some leading business figures including the heads of the International Monetary Fund and Goldman Sachs Asset Management for a change of tack in dealing with the UK's financial position have cut little ice with Messrs Cameron, Clegg and Osborne, who it seems are not for turning.

Johnson, as did others, repeated a call for there to be more spending on infrastructure projects, and while the announcement regarding the route of the high speed train line north of Birmingham between Manchester and Leeds is likely to give a boost to the construction sector, the blonde-haired one and his ilk want to see more such activity. And more.

However the government shows no sign of taking its foot off the austerity accelerator, as evidenced by the deputy prime minister's comments at the weekend; with more cuts expected in the public sector in the coming months the pain is to continue.

Nick Clegg said there was no alternative to tough action being taken now, in order that future generations are not saddled with paying off the debts of past transgressors.

There is no doubt that the books need to be balanced; the question remains how such balancing be achieved.

The worry for some is that like someone who agrees to an ambitious repayment programme on a loan – only to find that they are short of cash at the end of every month and subsequently need to borrow more simply to pay for essentials – the government is in danger of being too ambitious in its efforts.

Meanwhile the ONS figures concerning economic activity in the last quarter are due for at least two revisions in the next couple of months. These might show a slightly better picture than was first announced last week, or it might be gloomier still.

Either way, companies in the plastics sector will plough on, hoping that the conditions for growth are being nurtured by those who have the ability to affect these things.